Midterm Study Guide/Notes
Midterm Study Guide/Notes SCM 388 - 01
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This 30 page Study Guide was uploaded by Heidi Notetaker on Sunday October 11, 2015. The Study Guide belongs to SCM 388 - 01 at University of Indianapolis taught by Dr. Chris Harris in Summer 2015. Since its upload, it has received 40 views. For similar materials see Production/Operations Management in Business at University of Indianapolis.
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Date Created: 10/11/15
Chapter 1 Intro to Operations Management Goods Services Operations Management Supply Chain Value Added Services 0 Comparing Manufacturing and Service 0 Customer contact Labor Uniform Inputs Measuring productivity Quality Inventory Wages Patenting 0000000 Process Management 2 Production of Goods versus Delivery of Producing products and services Similarities of Management Forecasting Capacity planning Process Management Variation management Costs and productivity monitoring Supply Chain Management Location Inventory Quality Scheduling Process Categories of Business Processes 0 Upper Management 0 Operational 0 Supporting Managing a Process to Meet Demand Managers should be able to deal with variations They need to have the right amount of capacity Process Variation 0 Goods and Services 0 Variation in Demand Random and Assignable Why is Operations Management Important 0 Finance and Operations share information by 0 Budgets o Econ Analysis 0 Funding provision Lead Time Scope of Operations Management 0 Forecasting 0 Capacity Planning 0 Facilities and Layout 0 Managing Inventories o Assuring Quality 0 Motivating and Training Employees 0 Locating Facilities 0 Supporting functions 0 Purchasing 0 Industrial Engineering 0 Distribution 0 Maintenance Operations is effected by 0 Legal 0 Public Relations 0 Personnel and HR 0 Information Systems 0 Accounting Model Operations Managers ask 0 What is needed 0 When do we need them 0 Where do we need them 0 How much is needed 0 The design 0 Who Will put it together Types of Models 0 Physical Models 0 Schematic Models 0 Mathematical Models Benefits of Models 0 Easy to use 0 Cheap 0 Organization is required 0 Understanding o What if questions 0 Evaluation tool 0 Mathematics Quantitative Approach 0 Linear Programing 0 Queuing 0 Inventory Statistical and Project Models 0 Forecasting System Systems Approach 0 Main Theme 0 Essential When Pareto Phenomenon Craft Production Mass Production Interchangeable Parts Division of Labor Operations in Today s World 0 Technology 0 Product and Service 0 Process 0 Information 0 Globalization o More emphasis is being put on Operations Strategy Working with Fewer Resources Revenue Management Process analysis and Quality improvement Agility Lean Production 000000 EBusiness ECommerce Technology Six Sigma Total Quality Management Agility Lean System Key Issues 0 Economic Conditions 0 Innovating 0 Quality Problems 0 Risk Management 0 Competing in a Global Economy Sustainability Principles Ethics in the Workplace 0 Utilitarian Principle Financial Statements 0 Rights Principle Safety of Workers 0 Fairness Principle Safety of Products 0 Common Good Principle Quality 0 Virtue Principle Environment Community Ethics Employment Decisions Closing of Facilities Worker Rights Ethical Framework Managing a Supply Chain Operation Competing Globalization 0 Improvement EBus1ness 0 Outsourcing Levels 0 Transportation Costs Supply Chain Complexity Inventory Management Outsourcing Chapter 2 Competitiveness Strategy and Productivity Operations in uences competitiveness 0 Service 0 Product and Service Design Managers and workers 0 Cost How does the Market effect 0 Location Competitiveness 0 Quality 0 Customer wants and needs 0 Price and Quality 0 Advertising and Promotion 0 Response Quick o Flexibility 0 Inventory 0 Supply Chain Management Competitiveness Why do Organizations Fail 0 Neglecting of Strategy 0 Not taking advantages of strengths and opportunities 0 Not noticing threats 0 Focus on the short term and not enough on research and development 0 Focusing too much on design and not on improvement 0 Neglecting investments 0 Not establishing internal communications and cooperation 0 Not considering What customers wantneed Mission and Strategy 0 Basic Strategies 0 Price 0 Responsiveness o Differentiation o More Strategies 0 Scalebased Specialization Newness Flexible Operations High Quality Service Sustainability Low Cost OOOOOOO o Forming the Strategy 0 Internal and External Factors I External 0 Economic 0 Political 0 Legal 0 Technology 0 Competition 0 Markets I Internal 0 Human Resources 0 FacilitiesEquipment 0 Financial 0 Customers o ProductsServices 0 Technology 0 Suppliers 0 Other Patents labor company image Mission Mission Statement Goals Strategies Tactics Core Competencies SWOT Order Qualifiers Order Winners Environmental Scanning Strategy 0 Operations Strategy should be linked to Organization Strategy Operations Strategy Quality based Strategy Time based Strategy From Strategy to Action Implications 0 Low Price 0 Low Variation and High Volume 0 High Quality 0 High Initial Cost 0 Quick Response 0 Flexibility 0 Innovation 0 Large investments in R amp D o ProductService Variety 0 High variation and high worker skills 0 Sustainability 0 Affects location planning design returns and waste management Productivity 0 Formula Output Input 0 Productivity Growth Current Productivity Previous Productivity X 100 Previous Productivity Productivity Multifactor Measure Output Labor Capital Energy Factors that Affect Productivities 0 Standardizing 0 Scrap Rates 0 Labor Turnover 0 Quality 0 New Employees 0 Design of the 0 Internet 0 Safety Workspace 0 Computer 0 Shortage of IT 0 Incentive Plans Problems workers 0 Lost Items 0 Layoffs What is the difference between efficiency and productivity 10 Chapter Three Forecasting Forecast Forecasts are Always Wrong Like the Weather Forecast Goal Match Supply to Demand 0 Need to know how much demand is needed 0 How accurate is it Two Uses 0 Plan the system Long Run 0 Plan the use of the system Short run 0 Also Used For 0 Profit prediction 0 Available Energy Elements of a Good Forecast 0 Timely o Accurate o Reliable 0 Meaningful Units 0 In writing 0 Simple to Understand and Use 0 Cost Effective Forecast Accuracy 0 Impossible to predict future values Forecast Error Actual Predicted Positive Errors low forecast Negative Errors high forecast Commonalities Among Forecasts 0 Same causal system from the past is still present 0 Not Perfect 0 Groups of Items Better Forecast 0 Accuracy depends on time periods Steps in Creating the Forecast 0 Purpose 0 Time 0 Data 0 Forecast Technique 0 Make Forecast 0 Monitor Error 11 Mean Absolute Deviation MAD Mean Squared Error MSE Mean Absolute Percent Error MAPE MAD Mean Absolute Error Sum of Actual Forecast N MSE Mean Squared Error Sum of Actual Forecast2 MAPE Mean Absolute Percent Error Sum of Actual Forecast Actual N J udgmental Forecasts Time Series Forecasts Associative Model Delphi Method Approach 0 Qualitative o JudgementOpinion 0 New Products don t have a past 39 Surveys 0 Executive Opinions I Long Run Planning 39 Opinions from Many 12 o Salesforce Survey No way to identify potential customers 0 Delphi Method Times Series Questionnaires Trend Seasonality Cycle Irregular Variation Random Variation 0 Trend 0 Seasonality Nai39ve Forecast Trend Series Data Random Variations Cycles 0 Irregular Variations Moving Average Weighted Average Exponential Smoothing 0 Demand of previous period Nai39ve Method 0 No cost 0 Quick 0 Easy 0 Not accurate Moving Average 0 Three period 0 Last three periods averaged forecast 0 Five period 0 Last five periods averaged forecast Weighted Moving Average 0 Last periods are weighted so that the most recent period is more significant than the least recent period 13 Exponential Smoothing 0 Next forecast Previous Alpha Actual Previous 0 Takes into account forecast error 0 The closer alpha is to zero the slower the response to error 0 Most Widely used Focus Forecasting Diffusion Models 0 Best current performance 0 Fore new products 0 Uses all forecasts and takes the best 0 Based on adoption rate and usage is Whichever has the highest 0 Market accuracy 0 Mass Media 0 Word of Mouth Linear Trend Equation Trend Adjusted Exponential Smoothing Centered Moving Average Techniques for Trend 0 Linear Trend Equation 0 Forecast a bt I A forecast at time zero I B slope 0 Change in Y divided by the Change in X I T Time period 0 Trend Adjusted Exponential Smoothing 0 Next Forecast Forecast smooth error current trend Seasonal Variation Seasonal Relative Seasonality 0 Seasonal Variation 0 Seasonal Relative 0 Used to deseasonilize the data I Divide data by the seasonal relative o Incorporate in Forecast I Demand has trend and Seasonality I Trend Estimates using Trend Equation I Add seasonality to trend line 0 Multiply trend estimates and seasonal relative o Centered Moving Average I Accounts for Trend 0 Using Simple Average Method I Simpler than Moving Average 14 Least Squares Line Standard Error of Estimate Correlation Control Chart Tracking Signal Bias Predictor Variables Regression Associative Forecasting Techniques 0 Regression 0 Primary Analysis Method Simple Linear Regression 0 Least Squares Line y a bx 0 Standard Error Estimate 0 Se Square root of Sum of YYe2 divided by n 2 Three elements of valid indicator 0 Logical explanation between movement of indicator and variable o Indicator precedes movement of dependent variable 0 High correlation between Z variable Look up r Simple Regression Required Assumptions Regression Analysis 0 Variations are random 0 Plot points 0 Normal Distribution 0 Check time Dependence 0 Predictions are Within the observed 0 If there is a correlation other values variables might be present Na39ive Period Demand Forecast Error Absolute Squared 1 217 215 2 2 4 09 2 213 216 3 3 9 14 3 216 215 1 1 1 05 4 210 214 4 4 16 19 5 213 211 2 2 4 09 6 219 214 5 5 25 23 7 216 217 1 1 1 05 8 212 216 4 4 16 19 2 22 76 MAD 2750 MSE 1086 MAPE 128 Moving Average Period Demand Error Squared 1 217 213 216 210 213 219 216 212 OOICDU39IgtWN 15 185 10775 MAD 2313 MSE 1539 MAPE 108 Period 1 OONONU39lbWN Demand 217 213 216 210 213 219 216 212 Exponential Smoothing Forecast Error Absolute Squared 21700 400 4 16 19 21660 060 06 036 03 21654 654 654 427716 31 21589 289 2886 8329 14 21560 340 34026 115777 16 21594 006 00623 000389 00 21594 394 39439 155543 19 14505 21435 945965 MAD 2679 MSE 1351 MAPE 126 ALPHA 01 16 Chapter Four Product and Service Design Introduction Purpose of Product and Service Design 0 Product meets needs 0 Product is refined 0 New products 0 Goals 0 Costs 0 Prototype 0 Specifics 0 Process Specifics Manufacturability 17 Serviceability Key Questions 0 Demand 0 Is it Possible 0 Quality 0 Economics Reverse Engineering Reasons to Redesign 0 Economics 0 Demographics 0 PoliticalLegal 0 Competitive 0 Cost 0 Technology Research and Development R amp D Generating Ideas 0 Basic Research 0 Applied Research 0 Development Product Liability Uniform Commercial Code Legal and Ethics Design Must Follow Company Guidelines 0 High quality means high cost 0 Value 0 Safety and Healthy is priority Human Factors 0 Example Crashing Vehicles Cradle to Grave Assessment Culture Factors Different designs in different places Global teams provide perspectives 18 Value Analysis Remanufacturing Design for Disassembly Recycling Design for Recycling DFR Sustainability 0 Cradle to Grave 0 0 End of Programs 0 Other Considerations 0 Life Cycle 0 Phase 1 Curiosity I Has kinks I Price is high 0 Phase 2 Growth I Demand grows 0 Phase 3 Maturity I Demand evens out I Less Redesigning I Low Cost Recycle High Productivity 0 Phase 4 Decline Discontinue or New Product Low Cost Low Resources 0 Items without Life Cycle Pencils Nails Knife Standardization 19 Mass Customization Delayed Differentiation Modular Design Reliability Failure Normal Operating Conditions Robust Design Quality Function Deployment QFD Standardization 0 Benefits 0 Interchangeable parts 0 Less time and cost of training 0 Routine schedules 0 Disadvantages o No variety 0 Competition 0 Manufacturer freezes design Reliability 0 Impact sales 0 Higher reliability less resources used 0 Improving Reliability Mass Customization 0 Low Cost More Variety 0 Keep benefits of Standardization 0 Variety 0 Delayed Differentiation 0 Modular Design 0 Increase overall reliability by increasing components Robust Design 0 Won t fail o Taguchi s Approach 0 Make item less sensitive to environmental factors 0 Parameter Design Degree of newness 0 Modification of existing 0 Expanding 0 Cloning 0 New Quality Function 0 House of Quality 0 Customer Requirements 0 Design Requirements 0 Values 0 Competitive Assessment Kano Model 0 Quality 0 Basic 39 Causes Dissatisfaction if not there 0 Performance I Results in Satisfaction and Dissatisfaction o Excitement I Results only in Satisfaction 20 Concurrent Engineering Computer Aided Design Design for Manufacturing Design for Assembly Manufacturability Service Service Delivery System Product Bundle Service Package Service Blueprint Phases in Prod Design 0 Feasibility Analysis 0 Product Specifications 0 Process Specifications 0 Prototype Development 0 Design Review 0 Market Test 0 Production Introduction Designing for Production 0 Concurrent Engineering Computer Aided Design Production Requirements 0 Forecasts o Manufacturability Component Commonality 21 Phases of Service Design Conceptualize Service Package 0 Physical Resources 0 Goods purchasedconsumed that accompany o Explicit Services 0 Implicit Services Performance Specs Design Specs Delivery Specs Service Design Components aren t tangible Less time to find errors No inventory Visible Low barriers to entry Good location required Customer contact varies Large amount of variability Service Blue Printing Level of Detail Sequence of actions Time Estimates Failure points and plan to correct Challenges to Service Design Variability 0 Differences in Customers 0 Supply 0 Demand 22 Chapter Five Capacity Questions to Ask caPaCity DGCiSiOHS 0 Real Impact 0 Affect Operating Costs 0 Determines costs 0 What kind of capacity should we have 0 How much do we need 0 When do we need it by 0 Long term comm1tment of resources 0 Competitiveness 0 Ease of Management 0 Globalization Two Types of Capacity 0 Financial resources 0 Design Capacity 0 0 Effective Capacity 0 Capacity is the maximum rate of output achieved under ideal conditions Efficiency Actual Output Utilization Actual Output Effective Capacity Design Capacity What determines effective capacity Capacity Planning Steps 0 Facilities 1 Estimate capacity required 0 Product and Service 2 Evaluate existing capacity and Process facilities Human 3 Alternatives for meeting requirements Financial Analyses Key Qualitative Issues Select Alternative best in long run Implement Alternative Monitor the Results 0 Operational 0 Supply Chain 0 External 90899 23 Capacity Cushion Do we outsource or do it ourselves Developing Strategies 0 Available Capacity 0 Design Flexibility Into System 0 Expertise 0 Take Stage of Life Cycle into 0 Quality Considerations account 0 Nature of Demand 0 Big Picture Approach 0 Cost 0 Deal with Capacity Chunks o Risks 0 Smooth out Requirements 0 Optimal Operating Level 0 Strategy if expansion is involved Bottleneck Operation Economies of Scale Reasons for economies of scale 0 Fixed costs are spread over more units 0 Construction costs increase at a decreasing rate 0 Processing costs decrease at output rates increase 0 Distribution costs increase due to traffic congestionshipping 0 Complexity increases costs 0 In exibility o More levels of bureaucracy Diseconomies of Scale Constraint problems are solved 0 Identify worst constraint 0 Change operation to get max benefit Could be short term 0 Make other processes are supportive 0 Explore and evaluate ways to overcome the constraint 0 Repeat until fixed Constraint 24 Cost Volume Analysis 0 Total Costs Fixed Costs Variable Costs 0 Variable Costs Quantity X Variable Cost per Unit 0 Total Revenue Revenue per Unit X Quantity 0 Profit Total Revenue Total Cost Contribution Margin Break Even Point Indifference Point Financial Analysis Most common 0 Payback 0 Present Value 0 Internal Rate of Return Cash Flow Present Value 25 Chapter Six Types of Processes 0 Job Shop 0 Repetitive 0 Project 0 Batch 0 Continuous Project Product or Service Profiling Sustainable Production 0 Nonpolluting 0 Safe for workers communities and 0 Conserve Energy consumers 0 Natural Resources 0 Socially Rewarding o Economically Efficient Technology Type of technology that impact cost Technology benefits by productivity and competitiveness 0 Costs 0 Process Technology 0 Quality 0 Information Technology 0 Productivity 0 Capabilities 0 Examples 0 Laser Surgery 0 Internet 0 HD TV 0 Search Engines Technological Innovation Technology Types of Automation 0 Fixed 0 High Volume 0 Costly special Equipment 0 Low Cost 26 Programmable 0 High cost equipment controlled by computers 0 CAM Computeraided Manufacturing 0 NC Numerically controlled Machines Flexible o FMS Flexible Manufacturing System 0 CIM Computer Integrated Manufacturing Automation Computer Aided Manufacturing Numerically Controlled Machines Flexible Manufacturing System Computer Integrated Manufacturing Facility Layouts Important because Objective Investment of money 0 Investment of effort Long term commitment Keep work materials and information 0 Impact Cost 0 Impact Efficiency Types of Layouts Product Process Fixed Position Combination Cellular Service Assembly Services Item Stays still Uses a Workstations are split into Warehouse Line Hospitals Ship building combination of cells Retail UShaped Libraries the others Single Minute means that Flow of traf c Super Market the machine can convert Same layout in each product types store Right Sized means the Offices machine can move locations Flow of papers Communication between workers Automation ATM online reservation Product Layout 27 Product Line Assembly Line Process Layouts Intermittent Processing Fixed Position Layout Cellular Production Group Technology Line Balancing Line Balancing Cycle Time Output Rate Operating Time per Day Cycle Time Operating Time per Day Cycle Time Desired Output Rate Precedence Diagram Balance Delay Percentage of Idle Time Idle time per Cycle X 100 Actual Number of Stations X Cycle Time Efficiency 100 Percentage of Idle Time 28 Normal Distribution u term V31 H Mm fihii 40 6O 80 u 100 120 140 160 6 standard deviation 20 u mean 100 What are the odds that Product A will wear by before 70 months Z X u Z 70 100 Z 30 Z 15 Probability is 0668 6 20 20 29 40 6O 80 u 100 120 140 160 At least 140 months Find out how much is to the left of 140 first Z X u Z 140 100 Z 40 Z 2 Probability is 9772 6 20 20 Then Subtract the answer from 1 l 9772 0228 40 6O 80 u 100 120 14039 160 Between 65 and 145 months Find Probability of 65 months Z 65 100 Z 35 Z l75 Probability is 0401 20 2O Then find Probability of 145 months Z145 100 245 20 20 Z 225 Probability is 9878 Because we want the area between the two probabilities subtract 9878 0401 9477 30
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